Cutbacks for electric cars in Norway

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They come in all shapes and sizes, gliding silently across the streets of Bergen and Oslo. Since the 1990s, Norway has laid great emphasis on convincing the average motorist to ditch their fuel-run option and turn to electric cars.

More recently, cutbacks on some of the most attractive incentives to go electric have left concerns over whether the Norwegian government initially jumped the gun. The incentives themselves had been plentiful and tempting, including zero purchase and import taxes, 25% VAT exemption on the purchase and no annual road tax.

Leaders in electric car salesAs a result, new car buyers responded, to the extent that electric vehicles have held a monthly market share of more than 45% in recent months.

“The country has a set a new world record for the sale of electric cars”, says Øyvind Solberg Thorsen, Director of the Norwegian Road Traffic Advisory Board. His comments arrive in the wake of soaring numbers of new electric vehicle (EV) registrations in September 2018.

CutbacksBetween 2017 and 2018, the Norwegian government has conspicuously rolled back or reduced the benefits of some incentives. Most notable among them is the decision to start charging electric vehicle owners 50% of the full amount taken from the drivers of fuel-run cars on toll roads and ferries.

Important savings for EV motorists once included free municipal parking. Companies also saved a great deal on reduced car taxes. As of 2017, the free parking was withdrawn, while the reduction on company car tax was lowered from 50% to 40% in 2018.

“Yes, we see them pulling back some of the incentives, but as long as it's not a sudden shift, I don't think you will see a change in demand”, says Erik Nerheim, who works as a chief financial officer at a city department.

“The reason is that while some of the incentives are slowly taken away, the cars are getting better and have cheaper base prices.” These improvements offset the introduction of partly normal taxation, Nerheim continues, and “EVs will still be appealing for potential car buyers.” He is among the car owners planning a switch to electric.

Environmental concernsMost new buyers are also concerned about the environment and look forward to saving every penny on their commutes. It seems the initial encouragement has embedded itself in the psyche of Norwegian car owners.

“Not relying on a combustion engine fits in with my views on the environment”, says 41-year-old Ryan Peter Reed. He works as a content manager for an audio tech company. Reed chose to ditch his polluting fuel-run vehicle after it died from, in his words, “old age”.

Bergen Airport Environment Manager Peter Holmkvist, 48, is another who shares the concern over his carbon footprint. Despite the official pullbacks on some of the incentives, the financial benefits of owning an EV are obvious to him.

“When the city of Bergen introduced a higher road toll, I thought that the time was right to get an electric car”, he says. Holmkvist also happens to be a once-active member of the Byluftlistan political party which proposed the increased toll.

Still fuelled upNot all are ready to join the EV revolution. Thirty-eight-year-old shipping agent Laurence Timariu lives 60 kilometres outside Bergen and most of his driving extends up to 120 kilometres.

“Most Electric cars that are within the price I am willing to pay have a range of 100-130 km, except for Tesla, which I cannot afford”.

Meanwhile, Waqas Abid, 32, is willing to forego the high toll because he is, first and foremost, a car enthusiast. “If you have passion for cars, you don’t find electric vehicles as exciting. It’s more of a tool to get from one place to another”, he quips. Since he uses his car for long journeys rather than intercity commute, he would prefer to feel the response of the throttle and the torque kicking in. “That is not something I can feel with an electric car.”

Regardless, Norway’s drive to go electric still seems fully charged. Only time will outline the long-term effects of withdrawing or cutting back on some incentives to attract motorists to EVs. In the short run, the rising number of registered vehicles is difficult to argue with.